Functionality of Health Insurance in Germany
Statutory Basis: Obligation of Insurance
Wording of the Insurance Contract Act 2008;
Section 193: Insured person; obligatory insurance
(3) Each person with a place of residence in Germany shall be obligated to conclude and maintain with an insurance company licensed to operate in Germany for himself and for the persons legally represented by him, insofar as they are not themselves able to conclude contracts, a cost-of-illness insurance which comprises at least a cost refund for outpatient and inpatient treatment and in which the absolute and percentage excesses for outpatient and inpatient treatment which have been agreed for services covered by the respective tariff for each person to be insured are limited to an amount of Euro 5,000 per calendar year; for persons entitled to medical expenses assistance, the possible excesses emerge through the analogous application of the percentage not covered by the rate of medical expenses assistance to the maximum amount of Euro 5,000. The obligation in accordance with the first sentence shall not apply to persons who
1. are insured or subject to obligatory insurance in statutory health insurance, or
2. have a right to free treatment, to medical expenses assistance or to comparable rights
to the extent of the respective entitlement, or
3. have a right to benefits in accordance with the Asylum-Seekers Benefits Act, or
4. are recipients of recurrent benefits in accordance with the Third, Fourth, Sixth, and Seventh Chapters of Social Code Book XII for the duration of the receipt of such benefits and during periods of an interruption of the receipt of benefits of less than one month if the receipt of benefits commenced prior to 1 January 2009.
A cost-of-illness insurance contract agreed prior to 1 April 2007 shall be deemed to meet the requirements of the first sentence.
(4) If conclusion of contract is applied for later than one month after emergence of the obligation in accordance with subsection (3), first sentence, a premium supplement shall be payable…
Public Health Insurance OR Private Health Insurance
There are two equal health insurance schemes in Germany
Public Health Insurance system currently consists of 109 legal entities under public law with self-government. Premiums and provided medical supplies -which are to be appropriate and sufficient- shall be governed by the German authorities. The scope of benefits corresponds to 95% and mainly applies to the territory of Germany. The organisations are founded on the principle of solidarity, comparable to other European Health Systems. This means that all direct family members of one common household shall be covered by the main member´s contribution for free (certain conditions to be considered).
All new members will receive an EHIC (European Health Insurance Card) which allows at least emergency treatment within other European countries during travels.
There are also cooperation agreements amongst two European public health insurance providers of different countries. Mostly assignees or border crossers benefit from this regulation, especially when place of work and home address (and family) are different.
In priciple all German public health insurance providers are obliged to accept application of membership and to guarantee medical coverage without restrictions.
The exception proves the rule.
Comprehensive Private Health Insurance providers currently consist of 44 profit-orientated companies providing about 500 different tariff variants. Mostly coverage is provided worldwide and includes free choice of doctors, hospitals and dentists.
Nevertheless the particular declarations of the terms and conditions of each insurance provider have to be checked precisely before application.
Each member shall be assessed and covered separately. Medical coverage can individually be selected out of a wide range of tariffs. Once content of coverage is agreed, the insurance provider cannot remove any contractual components. This insurance does not require any participation of public health insurance.
If no reimbursement has been claimed during one year a no-claim-refund shall be paid out by certain insurance providers.
Additional Private Health Insurance tariffs shall add missing components to the public plans. The most demanded upgrading add-ons are travel health insurance, hospital care and dental treatment.
Entitled Group of Persons
Primarily access to the respective systems is depending on the agreed level of gross salary.
Only employees with an annual gross income of at least EUR 64,350 in 2021 (including a potential 13th wage or other additionally defined pays) shall be entitled for private health insurance.
Others such as German civil servants or self-employed and those persons working part-time with monthly earnings less than EUR 450 are also eligible.
The remaining group of persons is obliged to compulsory membership with public health insurance. Whereas the former may also decide to become voluntary member of
public health insurance.
Non-EU citizens earning above the current threshold cannot enter the public system, as pre-existence of a European public health insurance has to be proved. However exemptions should apply to foreign employees commencing their first-time-employment in Germany as well as to assignees being transferred to a local work contract.
This rule does not apply to self-employed persons.
For family members following rule applies: If both parents are working, their children have to become member of the system which has been chosen by the parent with higher salary.
Persons living in a registered partnership have the same rights as married persons.
Unmarried partners shall be considered as independent persons.
The above mentioned threshold shall be set by the German government every beginning of a new year. If the current salary slides under the new threshold level the privately insured person has to change to a compulsory public health plan.
However by application of the current social act a permanent exemption from mandatory public health insurance can be effected in favour of a private insurance.
Calculation of Premiums
By 2021 the standard contribution rate for all 105 state health insurance plans is set at 14.60% of gross monthly income. Each provider may add an additional fee which may increase the contribution rate up to 16.20%.
The statutory standard contribution is 15.90%.
The additional standard contribution for long-term care is 3.05% (plus 0.25% for childless members).
Thus, the overall public health insurance contribution rate is 19.20% of gross income.
Age, gender, health status or number of insured persons do not affect the premium.
Singles pay as much as families.
If the monthly income exceeds EUR 4,837.50 in 2021 the insurance premium will not rise further. Based on the average contribution rate this leads to a maximum monthly payable amount of approx. EUR 920.00. As the employer subsidises 50% of the monthly contribution (up to EUR 458.35 at most including nursing care) the effectively payable monthly premium remains at EUR 465.00 in average.
Premium calculation of private health insurance cover depend on age, health condition and selected tariff and it is calculated separately for each insured person.
Besides mandatory long-term care a 10% mandatory surcharge shall be integral part
The state of health can have an effect on the contribution or even lead to a rejection of the application.
In average a thirty-year old person pays half the maximum premium of public health insurance. A child roughly costs one-fourth.
Once premium is agreed it cannot be increased due to the member´s individual expenses. Annual adaption of premium is based on the development of general health expenses, those of all tariff members as well as the conditions on the financial market.
Just as for public plans the employer contributes 50% (EUR 458.35 at most) to the calculated employee´s premium including those for spouse/registered partner and children.
Historically an average increase of 4 to 5% per year is to be expected equally for both systems.
Additional Private Health premiums shall not be eligible for an employer contribution and have to be fully paid on top of public health insurance premiums.
Depending on the chosen scope of the insurance cover the additionally monthly payable premium shall vary between EUR 0.90 for a standard travel care insurance and about EUR 320.00 per person for an extensive add-on.
Duration of Membership
Members of a public health fund are generally tied to the chosen provider for a period of 12 months. Switching amongst different public health plans needs to giving two entire months notice to the minimum period.
Switching from a public plan to a private one only needs two entire months notice.
The 12 months period does not apply.
In certain cases not even the two months notice shall apply.
Minimum contract period of private health plans often last a maximum of two calendar years.
Switching amongst different private health plans needs to giving three months notice to the minimum period.
Switching from a private plan to a public one is excluded by law with two exemptions:
1. Salary drops below current threshold. 2. Unemployment
Extraordinary rights for both systems to terrminate the contract within the given
1. Change of premium. 2. Leaving Germany. A punishment fee will not be charged.
Details of Payment
Premiums of public health plans will automatically be settled through the monthly salary statement.
At the same process the mandatory tax-free employer contribution will be considered.
Premiums of private health plans shall fully be debited from the private bank account
of the employee. A SEPA mandate will be requested. In exception to this payment against invoice shall be allowed. Alternatively a standing order instalment shall be accepted.
The mandatory tax-free employer contribution shall be considered in the monthly salary statement.
Medical or dental treatments are directly handled between the physicians and the
public fund. The patient shall not receive any bill, except additional private benefits
have been claimed.
Approximately two weeks after a medical or dental treatment a privately insured person shall receive a detailed medical invoice to be paid within a month.
The invoice shall be submitted to the insurance company, which will reimburse the claim according to tariff agreements to the insured person´s bank account. Then the insured shall transfer the money to the physician.
Regarding treatments in hospital a direct payment agreement between the hospital and the insurance company shall be arranged.
Reimbursement of treatments within Europe shall be adjusted with the public provider
Invoices from outside of Europe are only reimbursable by private health prividers.
Therefore application of an additional worldwide private travel health insurance is highly recommended for emergency cases.
Invoices from treatments abroad shall be collected and paid in advance –or against invoice if possible- and then submitted to the private insurance company as described above.